• Prime Trust is a crypto custodian that has been ordered to halt operations while its regulator looks to take it over.
• The state of Nevada has alleged that Prime Trust owes customers more than $80 million in cash and had lost access to certain crypto wallets in 2021.
• Prime Trust’s interim CEO and board have signed off on the receivership filing made by the state Financial Institutions Division.

Prime Trust Is Having a Bad Month

Prime Trust, a storied crypto custodian, is facing a takeover by the state of Nevada after being ordered to halt operations while its regulator investigates financial issues. According to court filings this week, Prime Trust allegedly owes customers more than $80 million in cash that it doesn’t have.

BitGo Attempts Acquisition

On June 8, 2023, BitGo announced they were attempting to acquire Prime Trust but eventually walked away from the deal two weeks later on June 22nd. That same day rumors emerged that the state of Nevada had filed for a cease-and-desist order against Prime Trust, which was later confirmed by an official announcement from the state.

State Takes Over

Four days later, the state of Nevada took things one step further and filed for receivership (court approval to take over) alleging that Prime Trust owed clients about $82 million in fiat and had used customer funds to buy cryptocurrency in order to meet withdrawal requests for wallets they no longer had access too since 2021. This filing was made public on Tuesday and has sign-off from both Prime trust’s interim CEO and board indicating cooperation with the Financial Institution Division of Nevada.

Previous Leadership Changes

It should be noted that since its founding Prime trust has undergone multiple leadership changes throughout their lifetime as a company.

Conclusion

The situation with prime trust is alarming as it occupies a unique space among other bankruptcies we’ve seen so far due to their role as custody provider for cryptocurrencies.

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